By Cody Willard

Up until now, TiVo mostly just recorded television shows, and Netflix sent out DVDs to its subscribers using the postal service (indeed, a major component of Netflix’s costs has been postage). Until just this summer, there were still more dial-up Internet users than broadband-based users. And trying to download a DVD-quality movie is all but impossible at low connectivity speeds.

But as broadband becomes ubiquitous (not to mention the average speed of “broadband” rising too), it becomes increasingly viable to offer more services using the Internet as the distribution channel. What iTunes has done for music, somebody will do for movies. And what somebody does for movies, somebody will do for most every archived piece of video entertainment out there. And what somebody does for … well, you get the point.

It’s funny, but the same guys who wish death upon me now in my comments and who mock me around the Internet for touting Netflix’s place in the app revolution and for thinking Apple can run to $1000 by 2015 and that Google can get to $2000 by 2020 are the same guys who were trashing me for such predictions when these stocks were much, much lower.

And indeed, some of them are the same people who used to trash me when I predicted Apple in 2005 that Apple would someday have a bigger market cap than Microsoft.

Now, we’ve been buying Apple and Apple calls when it was getting crushed off the Universal Music purchase rumors. And I like the valuation on this stock and the fact that every investor and trader to whom I mention that I own says “What?! Why?!”long aapl, aapl calls

To get my latest analysis and my Revolution Investing rating on a scale from 1 to 10 for Netflix, Apple along with 48 other app revolution companies, including the ones I think will be the next Netflix and the next Apple, I invite you to check out my new report: 50 Stocks for the App Revolution which could go up 1000% by visiting http://AppRevolutionStocks.com.

Here’s the Netflix analysis from the new 50 Stocks for the App Revolution report:

Ten years ago, did you imagine that you’d no longer ship your CDs through the mail to Netflix and that the company would have figured out how to license and stream mainstream Hollywood content to you on your laptop…or your phone…or a tablet-pad touch screen computer?

The company quickly hit the concept of critical mass and is a lesson in how important it is to reach critical mass so that you can become a de facto standard of the industry:

In addition to PCs, more than 100 types of devices can stream Netflix movies to a TV, including game consoles like Xbox and Internet TV set-top boxes like Roku and AppleTV. More than three quarters of their tens of millions of customers are streaming a video every quarter.

And thusly, Netflix has already become a de facto standard for watching video in the 21st century. My mom and dad, aunt and uncle and two cousins all said to me this weekend in Dallas that they “Love watching Netflix.” Netflix is now a winner because it’s already hit such critical mass so early in this game.

The big problem of course is the crazy near-term valuation of this stock. The 45x forward earnings is daunting, but then again, this company’s growth rate is still accelerating. Finally, the company’s cost of programming is likely to increase in coming quarters and years as their own success will work against them in bargaining. A lot of moving pieces, but I’d still rather be long this one than short it over the next five years. Would love the opportunity to buy it below $100 again though.

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About The Cody Word

Cody Willard writes the Revolution Investing investment newsletter for MarketWatch and posts the trades from his personal account at TradingWithCody.com He is the founder of WallStreetAll-Stars.com and the principal of CL Willard Capital. Cody serves as an adjunct professor at Seton Hall University and is on the University of New Mexico Alumni Board. He was an anchor on the Fox Business Network, where he was the co-host of the long-time #1-rated show on the network, Fox Business Happy Hour. Cody, a former hedge fund manager, and his stock picks and economic outlooks have been featured on NBC’s The Tonight Show with Jay Leno, ABC’s 20/20, CBS Evening News, CNBC’s SquawkBox, Jon Stewart’s The Daily Show, as well as in the Financial Times, Wall Street Journal, New York Times, and many other outlets.